The impact of Brexit on the hospitality industry
Ever since the vote to leave the European Union in the 2016 referendum, the question of what this means for the UK hospitality industry has been hotly debated, with some pundits predicting a crisis on the horizon. However, it may not necessarily all be bad news. Since my last blog on this subject in November of last year, there have been various reports published and of course we have had the Spring Budget.
One immediate effect of the vote was on inflation. After years of minimal price rises, the UK was suddenly looking at forecasts of 3% or more. In particular, rising food prices seemed like a threat to the bottom lines of restaurants and other catering businesses. However, recent bulletins from the Office for National Statistics indicate a 12 month rate of 2.5%, less than some have feared.
However, as far as the industry is concerned, the most significant impact of Brexit has to be on staff recruitment and retention. According to a recent British Hospitality Association report, approximately 3 million people work in the sector in the UK, and as many as a quarter of these are EU nationals. In London, this figure rises to 38%. Overall, 43% of low level, non-managerial jobs in hotels and restaurants are filled by overseas workers. As a result of proposed tougher rules on the migration of EU workers post-Brexit, the same report goes on to predict a scenario in which the industry will experience a shortfall of 60,000 workers per annum over the next few years.
If this prediction turns out to be true, it will undoubtedly pose a problem for the industry. While increased productivity and automation can mitigate against staff shortages, there is no escaping the fact that the sector is labour intensive, and a low ratio of staff to customers will almost inevitably result in a decline in the quality of service.
However, there may be some positive aspects. Because it equates to more spending power for visitors from abroad, the weak pound which has been the new normal since the 2016 vote has served the sector well. In addition, there is also good news for young people thinking about a career in the industry. According to CV Library, sector pay has seen rises of over 10% in recent years, the highest increase in any part of the private sector. Needless to say, these pay rises are a reflection of the recruitment gap post-Brexit and the difficulty hospitality businesses have in filling vacancies. But they also create an opportunity, a chance to sell the potential rewards of a career in the sector and thus attract more home-grown talent. Allied to improved training schemes, this might well help to make companies less reliant on a workforce from the EU in the future.